Chicken is reprising its role as the star of Americans’ dinner plates.
Stung by the rising price of beef, diners are buying more wings at fast-food chains and frozen tenders at grocery stores. Meat giants like Tyson Foods TSN 0.00% and Pilgrim’s Pride PPC -0.93%, in turn, are bringing in higher profits from poultry as demand rises for their products and costs fall for livestock feed.
Retail sales volumes of all U.S. chicken products were up about 3% for the 52 weeks ended April 21 compared with the prior year, according to market research firm Circana. Pork and beef were each down slightly.
The share of U.S. consumers’ incomes spent on food is at a three-decade high, prompting people to shift spending toward cheaper, private-label items and cut back on purchases of some well-known brands. Last week Tyson executives said that shoppers are giving priority to essential items over beef and more expensive branded food products.
Shoppers often trade down to chicken from pricier meat cuts when food prices rise, but meat industry officials say the stickiness of inflation has made it tough to predict how long the trend will last.
A dwindling supply of cattle in the U.S. means meatpackers like Tyson are paying more to secure their livestock, raising wholesale and retail prices. Tyson executives said that ranchers have yet to start rebuilding their herds. The retail price of ground beef was up about 12% in March compared with a year ago, according to federal data.
“The consumer, they’re just being more discerning today than they’ve been in some time,” Tyson Chief Executive Donnie King said in an interview. “Demand there for chicken is very strong, some of that perhaps coming from beef consumers.”
Rick Lipinskas, 71, said he has been buying more chicken from the grocery store over the past year as beef prices rise. The retired state health department employee from Albany, N.Y., said he used to buy more ground beef, but chicken is a better deal now that ground beef is $5 a pound. He tends to buy bone-in thighs, boneless when they are on sale, chicken livers, or a whole chicken that he can store in the freezer.
“Somebody always has chicken on sale,” he said.
Consumers are trading down to cheaper chicken items on restaurant menus, said Fabio Sandri, CEO of Pilgrim’s Pride, which is majority-owned by meatpacking giant JBS. Sales at fast-food chains were up 6% for Pilgrim’s in its latest quarter from the prior year, even as overall restaurant foot traffic declines, the company said. Shares in the nation’s second-largest chicken processor are up about 60% over the past 12 months.
Restaurants are pushing chicken options to try to boost sales, though the landscape is getting more competitive as options have grown and eateries push deals.
Chicken chain Wingstop reported a 21.6% increase in domestic same-store sales in its latest quarter, driven by an increase in orders. Same-store sales reflect sales at locations open for at least 52 weeks. “The reality is we haven’t found the ceiling,” CEO Michael Skipworth said about Wingstop’s sales growth during an earnings call.
Chick-fil-A, the closely held chicken chain, averaged $7.5 million in sales at each of its U.S. locations last year, up 10% from 2022, according to market research firm Technomic. The chain is the third largest in the U.S. by sales, despite being closed on Sundays, Technomic figures show.
Popeyes Louisiana Kitchen increased its share of fast-food chicken sales in recent months through promotions on its new wings and a big-box meal, parent Restaurant Brands International said in a recent investor call. Meanwhile, competitors’ deals on chicken meals hurt KFC’s U.S. sales in the latest quarter, owner Yum Brands told investors.
Arkansas-based Tyson had struggled in 2023 with a glut of chicken on the market and higher costs. It spent much of this past year trimming its expenses, including closing six poultry plants, slashing corporate staff, and reintroducing some antibiotics into its bird supply.
Tyson sells roughly 20 billion chicken nuggets and 5.5 billion chicken wings a year. It said it is adding 16 new seasoned and marinated chicken, beef, and pork products in its 2024 fiscal year, seven of which are chicken.
Working in the chicken industry’s favor is falling grain prices. Tyson said it saved about $190 million in its poultry business on declining feed-ingredient costs in its most recent quarter, according to a securities filing.
Corn and soybeans are two of the main livestock-feed ingredients that chicken companies supply to farmers. Corn prices are down more than 20% over the past 12 months, while soybeans are down roughly 15%, according to FactSet.
Chicken prices aren’t likely to remain depressed for long. Wholesale chicken prices—what restaurants and grocery stores pay for chicken—are also rising as demand ticks up and supplies thin, industry officials said. The amount of chicken kept in cold-storage warehouses as of March 31 was down nearly 11% from the prior year, according to the Agriculture Department. Boneless, skinless chicken breast prices are up about 30% over the past 12 months, while wings prices have more than doubled, according to FactSet data.
Tyson and Pilgrim’s executives said recently they doubted the industry would hit the USDA’s projected chicken supply increase of 1%. Some of the issue stems from an industry problem of hatching enough chicks.
Pilgrim’s Pride said the hatchability issues stem from a new type of chicken breed that the company went to several years ago. The new breed was meant to improve quality and allow the new bird to gain more weight faster on less feed, executives said.